This record is a partial extract of the original cable. The full text of the original cable is not available.

101019Z Jan 06

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                  ------------------7C4CC6  101020Z /38    
FM AMCONSUL HO CHI MINH CITY
TO SECSTATE WASHDC PRIORITY 0224
INFO AMEMBASSY HANOI PRIORITY 
AMCONSUL HO CHI MINH CITY

UNCLAS  HO CHI MINH CITY 000034 
 
SIPDIS 
 
 
E.O. 12958: N/A 
TAGS: PREL ECON ETRD PGOV VM
SUBJECT: SCOPE PAPER FOR ASSISTANT SECRETARY HILL'S VISIT TO HO CHI 
MINH CITY 
 
REF: NONE 
 
¶1. (SBU) HCMC and its neighboring provinces are the economic and 
financial soul of Vietnam.  Textiles, footwear, furniture, 
aquaculture -- key export industries  -- as well as the 
country's USD seven billion oil and gas sector are centered 
around HCMC.  With roughly 15 percent of the population, HCMC 
and its neighboring provinces account for 36 percent of GDP, 34 
percent of GVN tax revenue and at least 42 percent of the 
country's total USD 26 billion FDI investment.  We believe that 
at least half of Vietnam's USD three to six billion in 
remittances flow into the HCMC area. 
 
¶2. (SBU) In your meetings with government and Party officials, 
political dissidents, Cardinal Man and business leaders and 
entrepreneurs, you will want to stress the same broad themes as 
outlined for your meetings in the capital.  On many of these 
issues, Ho Chi Minh City's decision-makers have substantial 
influence and "soft power" in the policy debate in Hanoi.  Most 
of the people you will meet -- including the dissidents -- will 
be particularly interested in how Washington sees Vietnam and 
the bilateral relationship, Vietnam's WTO prospects as well as 
regional issues, with a particular focus on China. 
 
¶3. (SBU) U.S. corporations, such as Nike, ConocoPhillips, and 
Citibank, and private American entrepreneurs  -- many from the 
Vietnamese-American ("Viet Kieu") community -- help drive HCMC's 
growth.  U.S., Japanese, and other foreign investors see 
southern Vietnam as a cost-effective hedge to China, especially 
in lower volume but higher quality products such as knitwear and 
fine furniture.  City leaders acknowledge that rising labor 
costs (underlined by recent violence-tinged strikes over wages), 
and the lack of both vertical integration and world-class 
transportation infrastructure threaten to undermine the region's 
competitiveness.   Local officials may tell you that their 
strategy is to move the city into higher value-added sectors, 
such as software and technology.  As HCMC pushes into these new 
areas, U.S. business is helping to lead the way.  There already 
are a number of U.S.-linked, medium-sized software developers 
based in the city.  HCMC's nascent tech sector will get an 
immense boost if Intel's plans to open a USD 600 million 
manufacturing plant here come to fruition.  More broadly, the 
HCMC American Chamber of Commerce has played a real leadership 
and informal advisory role in encouraging the GVN to stay on the 
path of economic reform. 
 
Leaders With Vision 
------------------- 
 
¶4. (SBU) Vietnamese provincial leaders have a significant degree 
of autonomy to implement Hanoi directives based on their 
interpretation of "local conditions."  Leadership helps explain 
why HCMC and some neighboring provinces are growing quickly -- 
up to 15 percent annually -- while other provinces are not. 
Political leaders in the HCMC region are determined to create a 
government culture more responsive to private business needs. 
HCMC's recent Provincial Party Congress kept intact the city's 
management team -- headed by HCMC Party Secretary and Politburo 
member Nguyen Minh Triet, at least for now. Rumors persist that, 
following the 10th Party Congress, Triet will be sent to Hanoi 
to become Chief of the Commission on Organizational Affairs of 
the Party's Central Committee.  In this capacity, he will remain 
a Politburo member, and his protege, and current HCMC Party 
Deputy, Le Hoang Quan, will succeed him (and also join the 
Politburo). 
 
¶5. (SBU) HCMC's leaders have been relatively progressive in 
handling religious freedom and human rights issues.  Although 
implementation problems remain, Cardinal Man will tell you that 
HCMC has partnered with the Catholic Church to combat HIV/AIDS, 
the first such faith-based partnership in Vietnam.  Similarly, 
Protestant groups, including house churches, report improved 
treatment here.  Two house church organizations recently have 
been registered under Vietnam's legal framework on religion, a 
first in Vietnam.  However, leaders of the staunchly 
anti-Communist United Buddhist Church of Vietnam (UBCV) remain 
under pressure, as does the city's small political dissident 
community; the authorities view both the UBCV and the dissidents 
as threats to the regime. 
 
¶6. (SBU) Elsewhere in our Consular bailiwick, particularly in 
the Central Highlands, leaders have been tougher on religion and 
slower to enact the reforms needed to grow the local economy, 
but even there we see progress; again, more dynamic provincial 
leadership makes all the difference.  A case in point is Dak Lak 
Province, where new leadership appointed during the recent 
provincial Party Congress appears far more open to dialogue than 
its predecessors, has eased pressure on religious groups, and 
has facilitated the issuance of passports for ethnic minority 
individuals seeking to join their families in the U.S. under the 
VISAS-93 program. 
 
Reform vs. Control 
------------------ 
 
 
¶7. (SBU) Our contacts in southern Vietnam portray a Communist 
Party on the horns of a dilemma as it prepares for the 10th 
Party Congress this spring.  On the one hand, Party officials 
fret that reform will erode the power and patronage that help 
them control Vietnamese society.  On the other hand, Party 
leaders here believe that their legitimacy rests in part on 
satisfying the economic demands of the average Vietnamese.  They 
also are looking anxiously at China, whose influence and power 
is becoming an increasing preoccupation to nationalistic 
Vietnamese inside and outside the Party.  Perhaps more than 
anywhere else in Vietnam, leaders in HCMC seem to appreciate 
that financial and capital market reform and stronger rule of 
law are needed to prevent growth from sputtering, particularly 
in a WTO environment.  They also appreciate that the HCMC region 
needs capital to dramatically upgrade its inadequate roads, 
ports and airports lest poor infrastructure become a bottleneck 
to growth.  City leaders likely will press you to encourage more 
U.S. infrastructure and technology investment in the province. 
You may wish to point out that to succeed, the city must wean 
itself from an overdependency on tied-ODA and seek competitive 
market solutions for infrastructure development. 
 
Attitudes Toward the United States 
----------------------------------- 
 
¶8. (SBU) Polling has shown that public attitudes toward the 
United States are more positive in HCMC -- and in southern 
Vietnam writ large -- than in the North.  However, this warmth 
does not permeate the Party, which even in the more open South 
remains ambivalent about the United States.  The most 
progressive officials privately tell us that one-party rule is a 
developmental dead end.  Pragmatists acknowledge that we are the 
only economic, political and military counterweight to China. 
Others, particularly Ministry of Public Security officials and 
Party ideologues, suspect that the USG seeks to use economic 
reform and pressure for greater human rights to engineer the 
overthrow of the Party; hardliners have termed this notion 
pejoratively, "peaceful evolution."  These themes are the 
subtext for much of the ongoing debate between reformists and 
Party hardliners in the run-up to the 10th Party Congress. 
 
¶9. (SBU) Former Prime Minister Vo Van Kiet, senior statesman of 
the Party in southern Vietnam, has emerged as the de facto 
spokesman of the Party's reformist wing, which is pushing for 
the Party Congress to endorse comprehensive economic, social and 
political reform.  Kiet has accused conservatives of fostering a 
climate of cronyism and venality that damages the Party's 
legitimacy, stifles economic growth, and undermines Vietnam's 
aspirations for international integration, including WTO 
membership and improved relations with the United States. 
Kiet's prescriptions -- economic and political -- are the most 
comprehensive and far-reaching that we have seen emanate from 
within the Party's senior ranks thus far. 
 
¶10. (SBU) Kiet has become the darling of the reform-oriented 
HCMC press, which has given his statements headline coverage. 
HCMC's leading mass circulation newspaper also recently ran a 
daring series highlighting the 60th anniversary of the founding 
of the National Assembly in which it implicitly criticized that 
Party for stifling representative government.  The outcome of 
political jockeying leading to the Party Congress will set the 
tone for national policy in coming years on a range of political 
and economic issues of importance to the United States; 
political and institutional leaders in HCMC will continue to 
help shape that outcome. 
WINNICK 
 
 
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